China's ride-hailing giant Didi creates union, setting precedent for Xi's worker agenda

BEIJING (BLOOMBERG) – Didi Global is helping workers establish their first union, a groundbreaking decision its fellow tech giants may soon follow as China imposes rules to curb excessive work and protect millions of blue-collar workers from exploitation.

The ride-hailing giant announced the creation of the union on an internal forum last week without specifics, according to sources familiar with the matter. Didi drivers – mostly part-time and lacking full employee benefits – will likely be invited to join, one of the sources said, requesting anonymity discussing private information.

Peers, including food-delivery leader Meituan, are also studying the feasibility of internal labour rights organisations, another source said. Employees from Alibaba Group Holding have posted calls for the formation of a union on their own company forum, a third person said. Billionaire Richard Liu’s e-commerce empire JD.com also established a union this week, the Workers’ Daily, the official newspaper of China’s umbrella union organisation, reported late on Wednesday (Sept 1).

Tech giants like Didi are responding to regulators’ demands that sharing economy behemoths improve the welfare of millions of low-wage workers they depend on to power growth. That stems from Chinese President Xi Jinping’s “common prosperity” campaign to get the private sector to share the enormous wealth accumulated during a decade-long Internet boom, while reining in their growing influence. In Didi’s case, the move may curry favour with Beijing at a time it is said to be fighting to ensure its survival after forging ahead with a US$4.4 billion (S$5.9 billion) initial public offering over regulators’ objections.

While embryonic – and a reversal of the usual bottom-up process of change – support for effective unions marks a significant step for China’s hard-charging tech industry. The mobile boom has minted an unprecedented amount of tech billionaires, from Alibaba’s Mr Jack Ma to Didi’s Mr Cheng Wei and Meituan’s Mr Wang Xing, many of whom are now keen to show they are giving back. Didi’s shares surged 12 per cent in New York, leading a rally in Chinese tech stocks.

Gig economy workers from Silicon Valley to India have in recent years become increasingly vocal in protesting their rights, gaining the attention of politicians. In China, the issue came to the fore more recently, following years of breakneck expansion by the likes of Meituan, Alibaba, Full Truck Alliance and Pinduoduo into fledgling arenas from community commerce to meals and grocery delivery.

Didi, now under investigation over data privacy violations, made its internal announcement just after China’s top court and Labour Ministry published a lengthy essay outlining 10 cases – including but not limited to the tech industry – in which employees were forced to work extra hours or put in harm’s way, using real and richly detailed court disputes to demonstrate how to fight against labour rights violations.

The essay was viewed as a fresh warning towards tech’s heavyweights, many of which are known for punishing demands and unreasonable overtime. It adds to the challenges for an industry already weathering heightened scrutiny over everything from their troves to data to endemic issues such as forced drinking during official functions.

China’s tech workers face immense pressure to log long hours to meet exacting deadlines while often lacking clear legal recourse – in contrast with Silicon Valley, where icons including Apple, Google and Intel have paid hundreds of millions of dollars to settle a class-action lawsuit filed by workers. Alibaba’s Ele.me and Meituan have weathered criticism about harsh treatment of gig economy workers, after several deliverymen were killed or injured trying to meet strict deadlines.

The history of unions in China dates back to 1921, when a then-fledgling Communist Party converted workers into Marxist followers. Today, they are mostly offshoots of the government-backed All-China Federation of Trade Unions (ACFTU), which has lost much of its effectiveness, according to researcher Aidan Chau from the Hong Kong-based China Labour Bulletin.

Robust unions have been virtually non-existent among China’s Internet companies, partly because of a government abhorrence toward self-organised citizens’ groups that could undermine the Party’s power. The lack of collective bargaining power has made it challenging for many to get heard. In one widely debated case, a delivery driver for Alibaba’s Ele.me set himself on fire to protest unpaid wages.

Mr Xi has since 2013 called on the ACFTU to reform and take a more active role in achieving his “China Dream”, Mr Chau said, a precursor to his current “Common Prosperity” mantra.

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